About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Supreme Court of Appeal
SAFLII
>>
Databases
>>
South Africa: Supreme Court of Appeal
>>
2012
>>
[2012] ZASCA 192
|
|
Senwes Ltd v van der Merwe (241/12) [2012] ZASCA 192 (30 November 2012)
Links to summary
THE SUPREME COURT OF
APPEAL OF SOUTH AFRICA
JUDGMENT
Case no: 241/12
Not Reportable
In the matter between:
SENWES LIMITED
...........................................................................................
Appellant
and
MICHAEL FRANCOIS VAN
DER MERWE
.................................................
Respondent
Neutral citation:
Senwes Limited v Michael Francois van der Merwe
(241/12)
[2012] ZASCA 192
(30 November 2012)
Coram: HEHER, SHONGWE,
LEACH and THERON JJA and SOUTHWOOD AJA
Heard: 15 November
2012
Delivered: 30 November
2012
Summary:
Contract:
Interpretation - clauses offering alternative remedies to
non-defaulting party – whether such party retains claim
for
damages – whether the provisions of
ss 83
and
84
of the
Insolvency Act 24 of 1936
invalidated the agreement.
___________________________________________________________________
ORDER
___________________________________________________________________
On Appeal From:
North
Gauteng High Court Pretoria (Legodi, Thusi and Ismail JJ sitting as
court of appeal):
1 The appeal is upheld
with costs on the attorney and client scale and no order is made on
the cross-appeal.
2 The order of the court
a quo is replaced with the following:
‘
The
appeal is dismissed with costs on the attorney and client scale.’
JUDGMENT
___________________________________________________________________
SHONGWE JA (HEHER,
LEACH, THERON JJA and SOUTHWOOD AJA concurring)
[1] This appeal concerns
the interpretation of a deed of sale. On 6 March 2008, Claassen J in
the North Gauteng High Court, Pretoria
granted judgment in favour of
the appellant (plaintiff) against the respondent (defendant) for
payment of the sum of R9 172 394.69
for damages suffered.
On 7 May 2009 this court granted the respondent leave to appeal to
the full court, Claassen J, having refused
leave. On 2 November 2011,
the full court, per Legodi, Thusi and Ismail JJ, upheld the appeal
and set aside the judgment and substituted
it with an order
dismissing the action with costs. On 23 March 2012, the appellant was
granted special leave to appeal to this
court, the full court having
refused leave. The respondent also lodged a cross-appeal against that
part of the order of the full
court confirming the rejection by the
trial court of the respondent’s defence of invalidity of the
sale agreement, on the
basis of the provisions of ss 83 and 84 of the
Insolvency Act 24 of 1936 (the Act). For convenience, I shall refer
to the appellant
as Senwes and to the respondent as the purchaser.
[2] The purchaser was the
sole member of MJP Boerdery Close Corporation (the CC). On 14
September 2001, the CC applied for an order
for provisional voluntary
surrender. Subsequent thereto Senwes, as the major creditor of the
CC, applied for the final liquidation
of the CC which was granted on
27 November 2001. Mr Venter, an attorney from Bloemfontein, was
appointed as a further liquidator
together with the two others
already appointed.
[3] At the insistence of
Senwes, an insolvency enquiry was arranged for 16 to 18 October 2002,
because Senwes suspected that the
purchaser was disposing of assets
of the CC. Before the enquiry could start, the parties entered into
negotiations which resulted
in the conclusion of a written sale
agreement, the interpretation of which forms the subject of this
appeal. The sale agreement
was concluded and signed on 17 October
2002. In the deed of sale Senwes is referred to as the ‘eerste
party’ (first
party) and the purchaser as the ‘tweede
party’ (second party).
[4] The salient clauses
of the deed of sale are the following:
‘
1. Ten
opsigte van MJP BOERDERY BK (in likwidasie), kom die partye hierbo
genoem ooreen dat die tweede party vanaf die eerste party
aankoop,
die eerste party se eis in gemelde gelikwideerde boedel.
2. Voormelde aankoopprys wat deur
tweede party betaalbaar is aan eerste party, beloop die bedrag van
R10 500 00-00 (
TIEN KOMMA VYF MILJOEN RAND
), welke bedrag
die tweede party aan eerste party sal oorbetaal op die volgende
basis:-
2.1. R2 500 000-00 (
TWEE KOMMA
VYF MILJOEN RAND
) voor of op 31 DESEMBER 2002;
2.2. R3 000 000-00 (
DRIE
MILJOEN RAND
) voor of op 31 JULIE 2003;
2.3. R2 500 000-00 (
TWEE
KOMMA VYF MILJOEN RAND
) voor of op 31 DESEMBER 2003;
2.4. R2 500 000-00 (
TWEE
KOMMA VYF MILJOEN RAND
) voor of op 31 JULIE 2004;
3.1 Die betaling van die eerste
paaiement sal geskied deur die herfinansiering en/of aankoop van die
bestaande huurkoop bates, wat
insluit die volgende:
3.1.1. Een John Deere CTS Stroper met
Greenstar;
3.1.2. Een sestoring Senwes spilpunt;
3.1.3. Een sesry John Deere Planter;
3.1.4. Een sesry John Deere
Mielietafel
3.1.5. Een ses meter John Deere
Koringtafel;
3.1.6. Een 8400 John Deere Trekker.
deur die tweede party en/of sy
genomineerde.
3.2. Sodra die eerste party in besit
is van ’n goedgekeurde bankwaarborg vir die betaling van die
som van R2 500 000-00
(
TWEE KOMMA VYF MILJOEN RAND
)
en/of betaling ontvang, sal die eerste party sy regte en belang in
die bates in samewerking met die kurator en die boedel van
MJP
Boerdery BK (in likwidasie) aan die finansierder en/of die koper
oordra.
3.3. Teen betaling van die eerste
paaiement ten bedrae van R2 500 000-00 (TWEE KOMMA VYF
MILJOEN RAND) teen 31 DESEMBER
2002 sal die eerste party afstand doen
ten gunste van die tweede party van enige sekuriteit wat hy teen die
gelikwideerde boedel
het.
…
5. By wanbetaling van enige paaiement
voor of op die vervaldatum soos hierbo gestipuleer, sal die volle
uitstaande balans opeisbaar
en betaalbaar wees.
6. Afgesien van die voormelde
versnellingsklousule, kom die partye uitdruklik ooreen dat indien die
tweede party versuim om die
eerste paaiement soos op 31 Desember 2002
aan die eerste party te betaal sal die eerste party geregtig wees om:
-
6.1. hierdie ooreenkoms as
gekanselleer te beskou asof sy eis teen MJP BOERDERY BK nooit deur
die tweede party oorgekoop is nie,
waarna die eerste party normaalweg
sal voortgaan en optree as ’n skuldeiser in die gelikwideerde
boedel;
of
6.2. die tweede party gebonde te hou
aan hierdie ooreenkoms en afdwinging daarvan te verg ooreenkomstig
die voormelde versnellingsklousule
en sal ’n sertifikaat van
die eerste party se gemagtigde beampte dien as prima facie bewys van
die kapitaal en rente uitstaande
en verskuldig.
…
9. Indien enige van die party versuim
om die bepalings van hierdie ooreenkoms na te kom sal die onskuldig
party geregtig wees om
die skuldige party kennis te gee by sy
domicilium om sy kontrakbreuk reg te stel binne ’n tydperk van
veertien dae, by gebrek
waarvan die onskuldige party geregtig sal
wees om die ooreenkoms te kanselleer en sy regte af te dwing in terme
van die ooreenkoms
of gemeenregtelik.’
[5] It is common cause
that the purchaser failed to comply with the provisions of clause 2
of the deed of sale. Not a single instalment
was paid to Senwes,
therefore the purchaser was in breach of the sale agreement. On 13
February 2004, Senwes sent a letter of demand
to the purchaser
informing him of his failure to comply with clauses 2.1, 2.2 and 2.3
of the deed of sale and calling on him to
make good the breach within
14 days. It is further common cause that the purchaser also failed to
comply therewith. Clause 9 unambiguously
provides that in the event
the guilty party fails to make good the breach, the innocent party
shall be entitled to cancel the deed
of sale and thereafter to
enforce his rights in terms of the agreement or at common law.
[6] Indeed in or about
August 2005, Senwes issued summons against the purchaser for damages
in the sum of R9 172 394.69.
This amount was calculated as
follows: a sum of R1 327 605.31, being a dividend received
by Senwes after proving a claim
against the insolvent estate, was
deducted from R10 500 000.00 being the purchase price set
out in clause 2 of the sale
agreement. The undisputed evidence during
the trial indicated that at some stage, Senwes, in its capacity as a
creditor, proceeded
to file and proved a claim against the estate of
R14 644 203.39 but only received a dividend of
R1 327 605.31.
[7] Upon receipt of the
particulars of claim, the purchaser raised various defences that are
no longer relied upon.
[8] On the morning of the
trial in the high court the purchaser introduced an amendment to the
plea, which was not opposed. The
amendment was to the effect that the
sale agreement was invalid because it was contrary to the provisions
of ss 83 and 84 of the
Act. I shall deal in detail with these
provisions later in the judgment.
[9] At the trial both
Senwes and the purchaser led evidence. The trial court made
credibility findings,
discredited the purchaser
and concluded that on the whole there was one version before it, that
of Senwes, as supported by the evidence
of the purchaser,
where such evidence did not contradict that of Senwes.
It consequently found for Senwes.
[10] The trial court
decided the matter on the basis that ss 83 and 84 were not
applicable. It did not deal with the provisions
of clause 6.1.
However, the court a quo added another dimension when it said in para
12 of its judgment that;
‘
Whilst not
easy to understand the essence of the defendant’s defence as
raised in the plea, effectively, two issues were argued
before us.
Firstly, whether the agreement relied upon was null and void ab
initio. In the alternative, whether the plaintiff was
entitled to
claim anything from the defendant after having cancelled the
agreement, and having participated in the liquidation
proceedings.’
The court a quo reasoned
that the focus should be the provisions of clause 6.1. In para 29 of
its judgment, it said:
‘
Indeed the
plaintiff upon cancellation elected to go and join the queue in the
liquidation proceedings and was rewarded with a dividend
in the
amount of R1 327 605.31.’
The court a quo also
reasoned that;
‘… the main purpose of the
agreement was to take the CC out of liquidation. Accepting therefore,
that, that was the
purpose of the agreement, when it did not
materialise, the plaintiff would have preferred to go back to the
liquidation proceedings
to safeguard its interest in the liquidation
like any other creditor would do. This was what the plaintiff
actually did.’
[11] The nub of this
appeal lies in the interpretation of the sale agreement.
There
are two issues for determination by this court. The first involves an
interpretation of clause 6.1 of the sale agreement and
the second
relates to whether the agreement is in contravention of ss 83 and 84
of the Act and therefore invalid.
[12]
In
interpreting the provisions of the sale agreement I must state from
the outset that the purpose, context and the language used,
should be
the primary consideration for a sensible, rational and objective
meaning of the document. (See
Jaga v Dönges
NO and another
;
Bhana
v Dönges NO and another
1950 (4) SA 653
(A) at 662G – 663A and the cases therein cited.)
[13] I now deal with the
interpretation of clause 6.1. Senwes contends that its claim against
the purchaser is based upon a breach
by the purchaser of the written
sale agreement. It was and still is common cause that the purchaser
breached the sale agreement
in that he failed to make even a single
payment to Senwes in compliance with clause 2 of the agreement.
Therefore, argues Senwes,
it has a right, in terms of clauses 5 and 9
of the agreement, to claim damages, notwithstanding the provisions of
clause 6.1. I
agree. Clause 6.1 creates an escape mechanism for the
appellant at an early stage of its implementation. It relates only to
a failure
by the respondent to pay the first instalment timeously. In
that event the appellant acquires the right to treat the agreement as
cancelled ‘as if the respondent had never sold his claim
against MJP Boerdery to Senwes’ (in my paraphrase). The
necessary
implication is that no notice to remedy the failure is
contemplated or required, presumably because, once Senwes elected to
treat
the agreement as at an end, the failure by the purchaser to
comply with clause 2 of the agreement was not to be regarded as a
breach
in the context of an enforcible agreement but simply as a
reason to end the legal relationship between the parties as if it had
never been established. Hence the reason for the exclusion of the
automatic acceleration despite the express provisions of clause
5.
Clause 6.1 proceeds to state the ‘normal’ consequence of
there never having been a sale of the claim, viz that Senwes,
as a
creditor of the CC would proceed with the proof of that claim in the
estate.
[14] Clause 9, by
contrast, contains a standard breach provision operative in the event
of a failure to comply with any of the terms
of agreement (not just
the payment of the initial instalment). It refers to the guilt and
innocence of the defaulting and non-defaulting
parties; it requires
formal notice to remedy a breach of the contract, and a right in the
innocent party to cancel and enforce
the terms of the agreement or
its common law rights.
[15] Senwes pleaded
reliance on clause 9 in its particulars of claim; the allegations of
breach (in para 4), notice to remedy (para
5), cancellation (para 6)
and breach of contract and damages flowing from it (para 8), are
consistent only with such reliance.
The reference to the proof of a
claim in the estate (in para 7) is especially tied to the
cancellation referred to in para 6 and
clearly has nothing to do with
the ‘normal’ consequence to which reference is made in
clause 6.1.
[16] The purchaser, in
his plea, admitted the allegations in paras 4, 5 and 6 of the claim.
Exhibits C and D at the trial were formal
notices to remedy the
breaches. They refer not only to the failure to pay the first
instalment but also to the purchaser’s
default in relation to
the second and third instalments. As such they are reconcilable only
with clause 9.
[17] The conclusion
reached by the court a quo that ‘the issue under discussion did
not require to be decided mainly on fact,
but by mere looking at 6.1’
(clause 6.1) is, in my view incorrect. The sale agreement should be
considered in its entirety
and not merely on the basis of isolated
clauses (see
South African
Warehousing Services (Pty) Ltd v
South British Insurance Co Ltd
1971 (3) SA 10
(A) at 17H.) A
necessary conclusion from the proceedings and the evidence is that
Senwes’ case was derived entirely from
clause 9 and that clause
6 was irrelevant to the dispute between the parties.
[18] Clause 2 provided
the terms of payment of the purchase price of the claims. Clause 3
merely set out a means of effecting payment
of the first instalment,
ie by refinancing or selling the hire-purchase assets of the CC. This
provision was however inserted purely
for the benefit of the
purchaser, who could utilise its mechanism or not as it suited him.
The interest of Senwes lay in receiving
the purchase price set out in
clause 2. It had no interest in how the purchaser financed payment of
the price and it could not
insist on compliance with clause 3.1.
Clause 3.2 in turn depended on the ability of the purchaser to raise
the first instalment
on the strength of refinancing or selling the
assets. Here too, for the same reasons, Senwes had no interest
provided it was timeously
paid in full or unless the purchaser was
able to achieve the sale or refinancing as contemplated in clause
3.1.
[19] I now turn to the
question whether the provisions of the
Insolvency Act prohibited
the
conclusion of the sale agreement. The purchaser raised the invalidity
of the sale agreement due to the alleged conflict with
s 83
read with
s 84 of the Act. This defence was raised because the purchaser
understood the merx to be the assets mentioned in clause
3.1.1 –
3.1.6 of the agreement. In my view his understanding was erroneous.
The reference to the assets in clause 3.1.1 –
3.1.6 of the
agreement was a reference to the means of payment open to the
purchaser and not to the merx in the sale agreement.
Clause 1 of the
agreement makes it clear that the merx was the claim, as the
purchaser admitted in his evidence under cross-examination.
[20] Section 83 of the
Act deals with a situation where a creditor holds any movable
property as security for its claim. In the
present case, although the
said assets were in the possession of Senwes, they were kept there
for storage purposes and not because
Senwes held them as security.
Senwes was selling its right to claim against the CC (in liquidation)
nothing more and nothing less.
In the present case both ss 83 and 84
are irrelevant and of no application. Both the trial and the court a
quo rejected this defence
and I agree with that conclusion.
[21] The appeal must
succeed. Counsel for the purchaser conceded that the cross-appeal was
unnecessary.
[22] The sale agreement
provided for payment by the purchaser of costs on the attorney and
client scale, in the event of Senwes
instituting legal proceedings to
enforce its rights.
[23] In the result the
appeal is upheld and the following order is made.
1 The appeal is upheld
with costs on the attorney and client scale and no order is made on
the cross-appeal.
2 The order of the court
a quo is replaced with the following:
‘
The
appeal is dismissed with costs on the attorney and client scale.’
___________________
J B Z SHONGWE
JUDGE OF APPEAL
APPEARANCES
FOR APPELLANT M P Van Der
Merwe
Instructed by:
Tim Du Toit & Co Inc,
Pretoria;
Naudes Attorneys,
Bloemfontein.
FOR RESPONDENT B C Stoop
and J J N Swart
Instructed by:
Dreyer & Dreyer
Attorneys, Pretoria;
McIntyre & Van Der
Post, Bloemfontein.